15 Apr The Manufacturing Renaissance in the U.S. and What’s Driving It
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A manufacturing renaissance is taking place in the United States. According to a recent MIT study, 14 percent of manufacturers have initiated plans to move some of the production they currently have located offshore, back within the borders of the United States. An additional 30 percent of companies with production located offshore are seriously considering a move as well. The common term being used for this reorganization of production back stateside is reshoring. The reshoring movement is growing and can accumulate goodwill with domestic customers, consumers and even legislators. But any careful decision to reshore or expand domestic manufacturing capacity will be based on goodwill benefits and growing profitability.
Factors Driving the Manufacturing Renaissance
What factors are driving the renewing of domestic manufacturing? There are several benefits that increased domestic manufacturing capacity can bring, ranging from political to economic. Offshore plants and factories may struggle today with a lack of visibility in their upstream and downstream supply chains, and reshoring may bring additional control and insight. Over the last decade, material transportation costs have risen with higher fuel prices. However, while the manufacturing costs may still be lower for plants that are located offshore, the overall cost of the delivered product may offset these savings. International labor costs have also grown enough to reduce the savings that were originally realized when manufacturing was sent overseas in the first place.
The cost of disrupted work due to labor issues is another consideration, as well as the risks associated with loss of intellectual property or nationalization of local subsidiaries of multinational companies. Additionally, failure to meet an ever changing qua lity controls and regulations can further trigger need to relocate manufacturing operations that are currently overseas.
But do the potential benefits outweigh the potential cost increase of reshoring or expanding production in the U.S.? Your company will need to decide if it can come up with an equal balance of cost benefits. For any domestic manufacturing plant, profitability will ultimately be measured by how efficiently it can be run. Often, that focus on efficiency translates into a larger opportunity for technology to play a role in optimizing performance for domestic plants than their international counterparts. Today’s technologically equipped plants will require the automation and mechanization investments of the past decade along with the ability to scale and multiply those technological forces through mobility tools for the skilled workforce.
Mobility can act as a force multiplier for a manufacturer. However, a comprehensive mob ility strategy requires more than just one radio, one mobile computer, one wireless network, or one barcode scanner. An integrated suite of solutions can dramatically transform your plant floor and increase its efficiency, enhancing the profitability of your reshored or expanded domestic capacity.
There are three main elements of a modern manufacturing plant that can benefit from a comprehensive mobility strategy: assets, people and materials.
Your assets are the significant capital investment that keeps your business operating. From the machines along your production line to your lift trucks, each plant floor has several major assets to keep track of and maintain. Delays to repair or replace equipment can lengthy unplanned downtime, and greatly affect your bottom line as production slows dramatically or even stops. A recent study by Coleman Parkes Research Ltd, on behalf of Computer Associates, pegged the average cos t of unplanned downtime can soar as high as $196,000 per hour, but this will vary greatly based on the capacity of the plant and the affected segment of manufacturing. To further complicate matters, domestic manufacturers are faced with a significant shortage of skilled technicians that can serve and support their production equipment. A large number of current technicians are progressively entering or nearing retirement. Thus, the focus turns to ensuring new maintenance and production employees have the tools needed to make the right decisions and do their required job, so that your production equipment can perform at the level you require, to meet performance targets for profitability and growth.
To help facilitate these real-time decisions, deeply integrating mobile technology and automation is very important to getting the most out of your equipment. Devices such as mobile handheld computers or enterprise grade tablets keep operators connected to operations throughout the plant floor. Technicians are provided immediate access to critical information, alarms, alerts and automation control with mobile human-machine interfaces for monitoring and troubleshooting.
For example, let’s say there is a problem with a piece of equipment on the plant floor. An operations manager will receive an alert on his mobile device indicating the specific problem and dispatch the appropriate technician to make an immediate repair. The technicians are notified by their mobile devices or two-way radios and informed of the malfunction and the urgency to repair the machine. The technician now has enough information to arrive at the site of the problem with the proper tools and parts. Downtime is reduced, production can go on and efficiency continues to increase because not just any technician, but the correct technician for the job, is sent to fix the problem before it cascades and expands into other areas of operation in the plant . For less experienced maintenance technicians, video collaboration with remote experts on the mobile device at the point of activity provide real-time support and training.
Whether you depend on reactive maintenance, scheduled maintenance, or proactive maintenance to keep your assets functioning properly and efficiently, providing mobile access and extensions to your human-machine interface, operator rounds, and maintenance records can help your domestic plants run more efficiently and increase profitability.
Your people are what make your plant run efficiently and profitably. The manpower and level of skilled labor you need on the plant floor is specific to your operations, and that manpower is in very high demand. According to a Oct. 15, 2012 USA Today Article, a Boston Consulting Group report found that globally, 58 percent of high-skilled manufacturing and engineering job openings remain unfilled for at least three to six months, and there is also a small skills gap in the United States. Some manufacturers have noted that the cost of labor overseas is increasing and conformance to heightened and evolving regulations is difficult to ensure from abroad. More regulations mean greater attention to detail, and that drives production costs overseas up. In other words, global manufacturers who in the past enjoyed lower wage costs from labor arbitrage overseas may now find the gap between salaries and compensation has diminished and potentially been negated.
Reshoring means more manufacturing jobs for U.S. and Canadian citizens. The same goes for expanding the current domestic production. The goodwill that can be cultivated from domestic production is significant, driving up your brand equity. But manufacturers remain capitalistic by nature and measure success by focusing on top and bottom line growth. That requires workers in existing or net new domestic manufacturing job s to be as effective, efficient and productive as possible.
As with the assets example above, mobile technology can ensure the right people are dispatched to the right tasks every time. Their time is more efficiently spent as they can receive or send alerts from anywhere in the plant. Getting operators out of the control room and away from wired workstations and onto the production floor lets them handle additional tasks. They can access schematics for a machine on their head-mounted computer or ruggedized tablet. A single worker equipped with enterprise-grade mobile tools can cover more area on the plant floor than one without access to these valuable tools.
Raw materials need to be accurately traced, processed and managed for quality control. According to a March 4, 2011 BBC News report, consumers are 12 percent more likely to purchase a product with materials that can be traced. Vendor management, regulatory com pliance, batch and lot traceability, deep supply chain collaboration with all partners: all of these elements come into play when optimizing the flow of raw materials into your plant, as well as the flow of finished goods that leave your plants. Increased domestic production capacity can help manufacturers better realize the benefits that can come from greater visibility and control over these materials, but often this requires investment in new technology.
Devices such as radio frequency identification (RFID) tags and barcode scanners can allow for better tracking and data capture throughout your supply chain: from your suppliers into your raw materials warehouses, to a replenishment order from your plant, to adding those materials to a batch or lot, and to a finished product which conforms with your own quality standards and external regulations. In the case of a supplier issue or recall, employees can be easily dispatched through radios or mobile computer s with the data in their hands to make an immediate change, increasing efficiency, quality and safety and limiting the impact of the issue. This potentially can be a major cost savings for your operations, as errors will be reduced and agility to respond to rapidly changing market conditions can be enhanced.
In addition, with mobile technology, an operator or a quality control technician can examine work in process or finished goods and easily compare them to specifications on a ruggedized mobile tablet. They can make adjustments to the process to ensure conformance to quality specifications in order to minimize scrap losses and maintain customer satisfaction.
Reshoring or expanding current domestic production may be the right choice for your manufacturing operations. You need to carefully consider how it would affect your assets, people and materials and perform a cost-benefit analysis to see if it makes sense for your organization. Mobile technology and the industrial wireless network to support the applications can help improve the profitability of reshoring production capacity back stateside or expanding existing domestic capacity by minimizing unplanned downtime, enhancing worker productivity, and improving control over goods and materials within your supply chain. No matter where you stand on the reshoring discussion, the manufacturing renaissance is very real. Mobility is an integral part of this exciting new era of profitable production.
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